LTV — loan-to-value — is the loan amount divided by the property’s value. In fact, it’s the single number that decides how much cash you bring to closing. For example, an 80% LTV loan on a $500,000 property is a $400,000 loan and a $100,000 down payment. Simple math, big consequences.
Which “value” counts
On a purchase, lenders use the lower of the purchase price or the appraised value. However, a refinance uses the appraised value alone. That’s why refinancing after improving a property can unlock equity you didn’t pay for. Meanwhile, on a fix and flip, some lenders lend against the after-repair value (ARV) instead. As a result, the math changes entirely.
Typical maximums by property type
- Single-family rentals and small multifamily: up to 80% on strong deals, though 75% is more common.
- Commercial property (mixed-use, retail, office, warehouse): 70–75%.
- Hotels, land, and specialty assets: 60–70%. In short, the harder the asset is to resell, the more skin lenders want in the game.
- Foreign nationals: usually 5–10% lower than the standard maximum at each tier.
Why lower LTV buys a better rate
Every lender prices risk, and LTV is their favorite measure of it. For example, dropping from 80% to 70% often improves your rate meaningfully. In addition, on DSCR loans it improves the ratio, because a smaller loan means a smaller payment against the same rent.
A typical deal
A scenario I see often: an investor stretching for maximum leverage on a marginal property. At 80% LTV the DSCR lands at 0.98, so the file stalls. However, at 75% — one more increment of down payment — the ratio clears 1.05. As a result, the rate drops and the same property closes in three weeks.
Not sure where your deal lands?
Tell us the property type, price, and expected rent. Then we’ll tell you the realistic LTV — and your real down payment — within 24 hours. Submit your deal, in English or Spanish.
By Andres Jara — Alpha Equity Lending (NMLS #1855083). 20+ years in real estate finance, an MS in Finance, and an active South Florida investor and landlord.
